Understanding the False Claims Act: Whistleblowers’ Law Firm Looks at Government Intervention

The False Claims Act is a powerful weapon and, as we’ve talked about on this page numerous times, a large part of that power comes from the fact that ordinary citizens can use it to fight many forms of fraud on the United States government. After the initial filing of a whistleblower fraud claim, the government will eventually decide whether or not to intervene in the case. This is an important part of the process and our whistleblowers’ law firm knows that intervention in False Claims Act cases, such as recently occurred in a health care fraud suit, is often a positive sign. However, it is important to know that claims can be and are successful even absent government intervention.

The FCA and Intervention Generally

The False Claims Act (“FCA” or “the Act”) is a Civil War Era statute that was reenergized by a series of amendments in the 1980s. In short, a company or individual violates the Act when it defrauds the government, typically by overcharging the government or a government agency. Under 31 U.S.C. §3730(b), private citizens are given the power to bring FCA claims on the government’s behalf. These whistleblowers, also known as relators, are crucial since fraud by its nature is secretive and the government could not effectively fight fraud without the assistance of individuals who witness fraudulent acts. After the suit is filed, the government investigates the claim and then the Department of Justice (“DOJ”) decides whether or not it wants to take over the case. The decision to do so is known in legal circles as intervention.

Intervention and Non-Intervention in Practice

If the government intervenes, it takes over as the main plaintiff. A recent example of this decision was reported by McKnight’s last week. As the health care news source reported, the DOJ elected to intervene in a FCA case alleging that a California-based hospital chain defrauded the government by improperly admitting Medicare beneficiaries where the patient’s condition did not warrant admission and submitting more than $50 million worth of false Medicare claims to the government. The case was originally brought by a registered nurse who served as the director of quality and risk management for one of the defendant’s hospitals.

If the government does not intervene, the whistleblower can continue to prosecute the case. Although there does appear to be a higher success rate for intervened cases, the decision by the government to not intervene is not a death knoll for the case. In May 2015, as reported by the Denver Post, a company agreed to pay approximately $495 million to settle a claim it defrauded Medicare by throwing out good medication, dividing single-use vials into multiple doses, and then overcharging Medicare and Medicaid for those medicines. The case was successful despite the fact that the government, after a lengthy investigation, chose not to intervene. That case is believed to be the largest settlement in a non-intervened False Claims Act suit.

Whether or not the government chooses to intervene, whistleblowers are essential to the ability to functioning of the False Claims Act. Although the government does sometimes initiate FCA actions independently, the DOJ reported that more than $2.8 billion of the $3.5 billion recovered via the Act in fiscal year 2015 came from cases initiated by private whistleblowers. When cases filed by whistleblowers lead to a recovery by the government via a settlement or a verdict, the relator is entitled to a substantial reward. This reward is between 15% and 25% of the settlement proceeds in intervened cases and between 25% and 30% of the total if the government does not intervene.

Our Experienced False Claims Act Law Firm

The Brod Law Firm is proud to serve as a False Claims Act whistleblowers’ law firm. The FCA is a complex statute and knowledgeable legal counsel is critical to the success of any whistleblower-led claim. If you have witnessed fraud on the government, including but not limited to health care fraud or government contracts fraud, call us at (800) 427-7020. Together, we can make a difference.